MSC Industrial Direct Co Inc (NYSE:MSM), a leading North American distributor of a broad range of metalworking and maintenance, repair and operations (MRO) products and services, stock rose 0.80% (As on July 3, 11:14:00 AM UTC-4, Source: Google Finance) after the company reported better-than-expected fiscal third-quarter results, aided by higher prices and volume improvement. Average daily sales decreased 0.8% year over year, driven by benefits from price and improving performance in volumes. By customer type, public sector daily sales were up 2.4% while and national accounts and core and other customers declined 1.7% and 0.8%, respectively. Gross margin increased by 10 basis points, buoyed by favorable price and cost. The fiscal third quarter included encouraging data points, such as core customer sequential improvement, continued momentum in the high-touch solutions and a building productivity pipeline.
MSM in the third quarter of FY25 has reported the adjusted earnings per share of $1.08, beating the analysts’ estimates for the adjusted earnings per share of $1.03, according to the FactSet-polled consensus. The company had reported the adjusted revenue decline of 0.8 percent to $971.1 million in the third quarter of FY25, beating the analysts’ estimates for revenue of $970.2 million. Operating income was of $82.7 million, or $87.2 million on an adjusted basis and Operating margin was of 8.5%, or 9.0% on an adjusted basis
Additionally, during the fiscal third quarter, the company leveraged the strong free cash flow performance and balance sheet to return approximately $56 million to shareholders in the form of dividends and share repurchases, resulting in approximately $181 million returned to shareholders fiscal year-to-date.
The company anticipates average daily sales to be down 0.5% to up 1.5% for the ongoing quarter. The metric is projected to outperform historical sequential averages at the midpoint of the outlook, driven by higher prices and growing momentum of the firm’s growth initiatives. Adjusted operating margin is pegged at 8.5% to 9%, compared with 9% recorded in the previous quarter. The company has long-term objectives of growing to 400 basis points or more above the IP Index and expanding operating margins to the mid-teens. For FY 2025, the company expects Depreciation and amortization expense to be in the range of ~$90M-$95M, Interest and other expense to be in the range of of ~$45M, Capital expenditures to be in the range of of ~$100M-$110M and Free cash flow conversion to be in the range of of ~120%.